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Is the road to levelling up paved with anything more than good intentions?

It still seems like the government sees research, development, and innovation as key to the levelling up agenda. Tim Fanning and David Marlow are not sure how it all fits together.
This article is more than 1 year old

Tim Fanning is a Director at Hatch

David Marlow is the CEO of Third Life Economics

There wasn’t much good news in the Autumn Statement, but the Government’s renewed commitment to research and development (R&D) investment has been met with some relief among the research and innovation community.

We also learned that investment zones are also to be refocused around universities in “left behind areas.”

These decisions, and yesterday’s announcement of further funding, may reflect a recognition in Government that such investment is important for long term growth.

Indeed, the Levelling Up White Paper (LUWP) of 2021 restated an orthodoxy that low investment in RD&I contributes to a low wage, low skills economy:

By 2030, [to increase] domestic public investment in R&D outside the Greater South East (GSE)…by at least 40 per cent, and over the Spending Review period by at least one third.

Rishi Sunak’s speech to the CBI yesterday didn’t use the words “levelling up”, but it did strongly suggest an appreciation of the importance of research, development, and innovation in driving up the country’s long-term growth rate: something which politicians of all stripes seem to broadly agree on as a priority.

But how do you make it work locally?

The challenge of levelling up through R&D

While this is all welcome news, the task of driving levelling up through research, development, and innovation (RD&I) is not straightforward. The incorporation of place-based economic development objectives into RD&I funding represents a significant shift in intent. It has important implications for universities and national innovation institutes.

We recently examined these implications, working with the EPSRC (the Engineering and Physical Sciences Research Council) and the Henry Royce Institute (the ‘Royce’, which EPSRC core funds) to think through what a place-based agenda means for them. The Royce is the national innovation institute for advanced materials RD&I, with its HQ in Manchester and spokes in five Russell Group Universities, the UK Atomic Energy Authority, and UKAEA, and the National Nuclear Laboratory.

We concluded that without major change by both Government investors in RD&I and national innovation role players, the waypoints within the LUWP may end in a levelling up cul-de-sac.

What do research and innovation institutions need to consider?

Of course, national innovation undertaken in specific places has local impacts – it helps attract highly skilled employment and high-tech businesses, increasing local expenditure, business spillovers and clustering effects. This is the basic causal model on which the LUWP RD&I mission relies.

However, without local purposeful and strategic intent, this impact risks being incidental and at the margins of levelling up. As the Centre for Cities has previously found, the presence of research-intensive universities in particular places does not necessarily correlate with wider economic benefits.

If RD&I institutions are to achieve the place-based ambitions that government appears to expect, for many, there will need to be significant changes in their mindset, strategy, operational configuration and resourcing.

The pre-requisites are as follows.

Place-based strategic intent

Institutions need to be able to articulate what their place-based purposes are, and have some sense of what success would look like. An increasing number of universities have genuine values and multiple positive connections with the places where they are located. However, these are too rarely translated into corporate goals and specific intervention strategies that are proactively performance managed. This gap between vague aspiration and evidence-informed impact is often wider in the specific research institutes (some of them nationally-designated) in which universities are involved.

These strategic aims should be developed in consultation with local place-based leadership teams within the public and private sectors. Moving away from solely place-blind strategies is the essential starting point.

Our work highlighted a large menu of possible place-based interventions that institutions can pursue: from knowledge aggregation through to infrastructure investment, local ecosystem development, rapid response problem-solving and business growth support.

Choices need to be made, with local partners, on where to focus limited resources. And realism is needed on the time it might take for some lower TRL interventions to have a tangible socio-economic impact.

A place-based monitoring and evaluation system

Institutions need a measurement system to track the local impacts of their interventions. Existing systems are often not fit for purpose as they are geared towards place-blind funding streams and reporting systems.

At the very minimum, an institution should be able to quickly understand the nature and scale of their engagement with the business base in any place, and the characteristics of those businesses. It should then be able to determine what impacts these interventions are having on these businesses and on the wider economy. Recent developments in the Knowledge Exchange Framework (KEF) are a starting point only.

Board-level representation

To implement the first two elements effectively, there should be some Board level representation from members with an explicit place-based and “triple bottom line” (economic, social and environmental) policy and practice expertise. This kind of expertise might effectively complement scientific, technical and university leadership representation by providing a level of place-based assurance and direction.

Executive management capabilities

Finally, research and innovation institutes also need to consider the executive capabilities needed to deliver local and regional purposes well. These capabilities could be brought directly into the leadership team or be secured on a call-down, advisory basis.

Together, these pre-requisites amount to a major change agenda for leadership and management of hitherto more academic and business-oriented teams. They also need resource commitments behind them.

Outside the institutes themselves, the levelling up innovation agenda also requires ‘intelligent clients’ on the demand side – at city-region, district and community levels – able to frame sensible questions national institutes and programmes can answer; and mobilise local businesses, public bodies, and stakeholders to scale up change on the ground.

None of this is precluded by the LUWP and subsequent Government statements, but nor is it explicitly recognised.

A considered approach

The recent frenzy to prepare Shared Prosperity Fund investment plans and then Investment Zone EOIs – with little notice, time or resource – undermines this need for considered strategy development. Let’s hope that we don’t see a repeat of this.

If the Government is to achieve its levelling up ambitions through RD&I, there will be a need for many more exercises like the one we conducted with EPSRC and Royce – both on the supplier/funder side (such as UKRI) and on demand-side agendas like UK Shared Prosperity Fund and new devolution deals.

For more information about this project, please contact Tim Fanning or David Marlow.

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